Trading in the cryptocurrency and financial markets requires an invaluable skill to profit consistently from the massive wealth opportunities presented daily.
While there are a variety of strategies and trading tools a trader can employ to trade, a major differentiator among traders trading in the cryptocurrency markets narrows down to how and what timeframes a trader chooses to trade on.
Traders can be consistently profitable trading in the cryptocurrency markets by gaining adequate knowledge and sticking to efficient strategies.
Traders who choose a timeframe that works well for them can fall into categories such as Scalpers, Day Traders, Swing Traders, and Position traders.
This article will focus on scalping vs day trading strategies, their differences and similarities, and their relevance and meaning to traders.
Scalping: Definition And How It Works
Scalping is a form of trading where traders, referred to as scalpers, aim to maximize profit returns from relatively small price changes of a cryptocurrency.
Scalp traders identify multiple trade opportunities on a trading day and quickly open and close large numbers of trades at different time intervals once the price hits their predetermined targets.
Scalpers may enter into long or short positions and exit trades within a short time frame, sometimes in a few hours, a couple of minutes, or even a few seconds.
Traders who are known and associated with scalping in the cryptocurrency and financial markets often use higher leverage to profit significantly from small price movements of a cryptocurrency or financial instrument.
The goal and idea behind this form of trading employed by some traders are to accumulate small trade wins and profits, which materialize into big wins when combined at the end of a trading day.
Scalping, as a form of trading employed by traders, is an intra-day type of trading that gives ample room for traders to leverage short-term trade setups and opportunities to profit.
Scalpers are not concerned with the long-term outlooks of a cryptocurrency or long-term market sentiments, these traders are mainly concerned about short-term trade setups and quick profit opportunities that spring up on an active trading day.
Scalping strategies are associated with timely and quick executions of trade setups and market entries.
The fast and quick nature of scalping grooms traders to be alert and adequately precise regarding trade entries, market analysis, and observations.
Traders who fall into the category of scalpers also utilize and pay much attention to risk management strategies to be profitable in the long run and minimize trade losses.
Risk management strategies, leverage size, and use of technical indicators are must-have knowledge for traders looking to embark on and profit from scalping in the cryptocurrency markets.
New traders now exposed to the world of cryptocurrency trading and want to try out scalping may wonder how to go about it efficiently.
Experienced traders who are successful at scalping make trade decisions on lower timeframes on a price chart, such as the 1minute to 15-minute short timeframe.
These traders typically wait for multiple confirmations from technical indicators or a key price area of strong support and resistance levels to find trade setups and enter into trades with the goal of taking quick profits.
Traders know the scalping strategy to be a time-sensitive strategy where smart traders quickly utilize opportunities presented in short timeframes.
To be successful and efficient at scalping, traders may want to apply proper risk management to trade entries and be consistent at keeping win ratios high enough to cover for trade losses that can occur while trading in the cryptocurrency markets.
Scalping by traders requires considerable attention to running trades or open positions, but it can be reduced through the use of pending orders, such as taking profits, or by using a trailing stop loss.
Day Trading: Definition And How It Works
Day trading, as the name implies, is a trading strategy employed by a category of traders that focuses on opening a smaller number of positions and trade entries, usually between one to three trades, in a day.
Day traders typically identify trade setups and opportunities on a daily timeframe and enter into trade positions which are kept open for several hours until it hits the target or desired take profit.
A trader can successfully be termed a day trader if open trades within a trading day session and are closed by the trader regardless of the outcomes of trades, be it in profit or loss.
Daytraders ensure that all trades are closed at the end of a daily trade session and patiently wait to spot and identify opportunities for trade entries on the following day's session.
Traders categorized as day traders tend to use lower leverage than traders who scalp on shorter timeframes trading in the cryptocurrency and financial markets.
Day traders may not need to increase leverage and risks on a trade as they do not look for short-term or bits of quick profits but tangible profits at the end of a daily trade session.
They have a more robust trading setup when compared to scalpers and allow trades to run based on technical analysis of higher timeframe setups.
Day traders may not needlessly pay attention to running trades as they have their targets in place with proper risk management applied to trades.
Daytrading, unlike scalping and swing trading, gives ample room for traders to leverage high-price movements that may occur during a trading day and maximize long-term profits.
This is in line with the goal of everyday traders, as they seek to utilize later opportunities that may be present in the markets on a daily timeframe.
Analysis of the markets is done based on a daily horizon of possible trade outcomes analyzed by a day trader using technical indicators and trading tools.
Utilizing technical indicators by day traders may help significantly decide on market and price directions coupled with strategic levels for entering into trades.
Day trading may help to cancel out the noise that may occur in shorter time frames and narrow traders' decisions on target price levels on higher timeframes.
The profit margins that may result from day trades are relatively high as a determined number of open positions by traders are allowed more room to breathe and hit targets.
Traders looking to start as day traders may pay attention to several forms of market analysis on a daily timeframe or daily trade session.
Some forms of analysis day traders subject themselves to may include daily fundamental analysis, candlesticks pattern formations, key support and resistance levels, and volume of demand of a cryptocurrency, among other forms of daily market analysis.
To be a successful day trader, a trader may need to conduct daily research into preferred assets for trade entries, apply proper risk management strategies and close out trades without emotions at the end of each daily trade session.
Daytraders may also need to develop patience, and inner calm as the price of a cryptocurrency or financial instrument moves indecisively or against their open trade positions.
They must also follow through, stick to their trading plan, and avoid coming under the pressure of exiting open trades early, as it would make them scalpers and not day traders.
The penultimate goal of a day trader is to aim for a more significant profit margin from trades opened within the timeframe of a daily trade session.
Differences And Similarities Of Day Trading And Scalping
Day trading and scalping are commonly used strategies and trading styles leveraged by a vast community of traders for the type of trade opportunities they present.
Some beginner traders may interchange scalping and day trading strategies, but in the real sense, day trading and scalping are different, although they share some similarities.
When it comes to day trading and scalping in the cryptocurrency and financial markets, their differences outweighs their shared similarity.
The similarity between both trading styles is that both strategies are used on a daily timeframe or intraday trading session.
However, the differences in both trading styles are seen in their lengths of application in a daily trading session.
Daytraders can enter into long or short positions that run throughout a daily trade session or when price targets are hit on higher timeframes.
Traders, whose trading style is scalping in the markets, take advantage of short-term trade setups and opportunities for quick and fast profits.
Day traders may necessarily not use high leverage on open trades as their long-term daily profits are targeted and set to close once they hit desired profits.
Scalping, unlike day trading, sees many traders use high leverage for trade entries just to maximize profits that may result from short-term trade opportunities presented on a price chart.
They have a more robust trading plan and trade setup compared to scalpers, who utilize quick trade setups for quick potential profits.
Daytraders have a more holistic view of the markets daily than scalpers and are more patient and calm in leaving trades to run without needless monitoring and emotional trading.
They also allow trades to run on higher hourly timeframes compared to scalp traders who jump and exit trades on lower timeframes such as the 1 hour, 30 minutes, 15 minutes, 1 minute, or even in seconds timeframes.
Depending on preference, both trading styles and strategies can be effective if utilized adequately by traders looking to trade profitably in the cryptocurrency and financial markets.
Timeframes For Scalping Vs Day Trading
The cryptocurrency and financial markets present numerous trade opportunities for traders employing different strategies and trading styles.
Scalping vs. day trading has been a major topic among beginners looking to learn what timeframes apply to scalping and day trading.
Traders employing a scalping strategy to trading are usually very smart and time-sensitive when entering into trades.
Scalping in the cryptocurrency and financial markets by traders is done on short timeframes, with trade opportunities present at short timeframes intervals.
Scalp traders pay attention to these short-term opportunities that present themselves, entering and exiting trades on short time frames that may range from seconds to minutes and scarcely an hour.
Day trading on the one hand is a trading style employed by many traders who trade on longer daily timeframes and exit trades at the close of a daily trade session.
Unlike scalping, day traders are patient enough to apply trade entry strategies and wait it out pending when it hits desired profit margin on longer timeframes in a daily trade session.
Timeframes for day trading may range between multiple-hour timeframes on a daily trade session depending on a trader's trade setup and the number of open trade positions.
Regardless of trade outcomes, a day trader sticks to strategy and exits all open positions within a daily trade timeframe and trade session.
What Type Of Trading Is Most Profitable?
There are a variety of trading styles and trade strategies for traders to explore while trading in the cryptocurrency and financial markets.
Trading profitably and winning consistently in the cryptocurrency markets are within reach of traders who subject themselves to adequate and rigorous learning of trading styles they are comfortable with.
Traders' psychology plays a huge role in determining what strategies and trading styles would work best for them.
Trading styles and the use of trade strategies by traders are as effective if adequately and judiciously applied to trading without deviations from working strategy.
A trader may need to conduct personal and extensive research on strategies and trading styles that may suit the personalities and time schedules of different traders.
Frequently Asked Questions On Scalping And Day Trading
How Much Money Do You Need To Use Scalping Trade Method?
Traders who are scalpers in the cryptocurrency and financial markets take advantage of short-term opportunities on low timeframes to build profits and trade wins.
Leveraging the scalping strategy and trading style as a trader requires no costs and payments for its application.
However, to be able to trade on a cryptocurrency exchange, a trader may need to deposit and have a self-determined trading wallet balance, which can be used to trade on multiple cryptocurrencies and then apply scalping strategies.
Cryptocurrency exchanges, such as the Margex trading platform, are globally recognized and give traders and users a platform and access to a world of trade opportunities where individual trading strategies such as scalping can be applied to trading.
What Is The Easiest Method For Beginners?
The easiest and simplest method for beginners looking to trade and apply trading strategies requires extensive learning and personal research into trading cryptocurrencies and the different strategies and risk management tools available.
It is essential for beginners to gain knowledge and get acquainted with cryptocurrency and trading subjects to build a skill to become profitable trading in the cryptocurrency markets.
This requires personal effort and self-determination, which will yield results in the long run for beginners who are consistent in learning.
How To Start Scalping?
Scalping trading and entering into winning trades in the cryptocurrency and financial markets require skill and experience in trading.
For users and traders looking to employ a scalping trading style, adequate preparation and research into scalping strategies are required and essential.
Traders with experience in trading who want to embark on a scalping journey may need to pay attention to and identify short-term trade opportunities in low timeframes that can be leveraged.
The Margex cryptocurrency exchange and trading platform offers traders and users an enabled platform to employ scalp trading strategies and profitable trading styles.
Is Scalping Method Safer Than Day Trading?
A scalping vs. day trading method and strategy may be profitable and safe depending on its application and keen attention to detail by a trader leveraging it.
The outcomes and results of trades when using a scalping strategy may vary from day trader outcomes and vice versa depending on the skill set of a trader and strategy applications.
Traders may be advised to choose a trading style and strategy that best suits their daily preferences and improve on it through constant learning and in-depth personal research.
How Many Trades Do Scalpers Enter Into In A Day?
Scalpers are known to be on the lookout for trade opportunities that may appear on lower timeframes on a price chart.
Scalp traders may enter into multiple trades depending on trade setups and opportunities that may present themselves for trade entries on a daily trade session.
Scalpers can enter into trades in daily trading sessions ranging from 1 to hundreds of trade entries as much as trade opportunities are presented. Scalpers may conduct multiple technical analyses on several cryptocurrencies and trade setups, which can inform trade entries on short timeframes.